Distribution Walks A Fine Line

Many provide integration services at an extra charge. Some hold GSA contracts on behalf of vendors. One even launched a program where it bids on state and local government contracts as a prime, and another is promoting itself as a subcontractor for government opportunities.

This is not the distributor of five years ago. Traditionally, distributors played a distinct role in the channel. At the most basic level, they provided pick, pack and ship services to resellers, and at the most sophisticated, they offered configuration and back-office support. Regardless of where they each fell within that spectrum, distributors always remained the provider behind the curtain—mostly invisible to the customer.

But the role of the distributor is changing, particularly in the government channel.

"I think that [distribution] is reacting to revenue pressures, trying to grow their business in markets where they can turn a buck and still accommodate the channel relationship," says Augustine Riolo, COO at Virginia Beach, Va.-based Knowledge Information Solutions. "No harm, no foul yet. But they know that the channel is resilient. If we see this going away from us, we are going to make a converse move—lots of individual moves by hundreds of VARs away from the perpetrator. The distributor will lose control of their customer base, and it will impact their bottom line."

Next: Moving Out Front